How Conservative Lawyers Are Plotting To Land Obamacare Subsidies Case In Supreme Court

Conservative legal opponents of Obamacare are plotting to land their case in the Supreme Court, where they see a real chance that the justices will embrace their statutory argument and wipe out subsidies for millions of Americans.

The legal minds behind the Halbig and King lawsuits seeking to invalidate federal exchange subsidies are in a bind. The only court ruling in their favor so far may be reversed if the full D.C. Circuit Court of Appeals accepts the Obama administration's petition to rehear the case decided by a three-judge panel. Three other courts have ruled for the law, and so challengers can only win the case definitively at the Supreme Court.

The first step of conservatives' plan is to persuade the D.C. Circuit not to rehear the case by arguing that it would an unprecedented departure from its rules. The next step is to persuade the Supreme Court to take the case even if the D.C. Circuit reverses its ruling and brings lower courts in unanimity, which would be an unusual move for the justices.

"[I]f the D.C. Circuit rehears the case en banc, it would be a sharp break from history. The D.C. Circuit rehears virtually none of its cases," Adam J. White, an appellate lawyer for a group that has filed briefs against the ACA subsidies, argued in a Wall Street Journal op-ed this week. He argued that en banc grants — which a majority of judges have to agree to — have been exceedingly rare and restricted to disputes over "difficult questions of constitutional law" or to maintain uniformity in their precedents. Halbig, he concluded, is a "straightforward statutory interpretation case" and doesn't meet the standard.

"What's hard to find are cases in which en banc review in the D.C. Circuit was granted where there wasn't an underlying legal question that needed to be clarified or resolved and/or ... where it was just the majority disagreeing with the panel," Adler said by phone. "Those cases are very, very rare and that's not the way the D.C. Circuit has traditionally used en banc review. They have the power to do so here. They might. They're allowed to. It just would appears to be at odds with their traditional practice."

Legal defenders of Obamacare say the conservatives are embarking on a cunning strategy to preemptively undermine the legitimacy of an en banc decision by the D.C. Circuit, in part by implying that it would be politically motivated.

"The ACA challengers are trying to delegitimize the D.C. Circuit rehearing because they realize their best chance to win is at the Supreme Court. They know that if the D.C. Circuit grants hearing en banc that'll vacate the decision and there'll no longer be a split," said Brianne Gorod, appellate counsel for the Constitutional Accountability Center, which filed a legal brief on behalf of Obamacare for Democrats. "At that point if the Supreme Court grants review it would go against their normal practice."

Gorod argued that appellate rules restricting rehearings to cases of "exceptional importance" make clear an en banc grant would be appropriate in Halbig. She said that given the unanimity in other courts, the two Republican-appointed judges on the D.C. Circuit panel who decided against the ACA subsidies were the ones who made a "political decision" if anyone did.

Obamacare opponents have reason to worry that the D.C. Circuit panel will be reversed. While the three-judge panel was made up of two Republican and one Democratic appointee, the en banc rehearing will feature eight Democratic and five Republican-appointed judges. Even if partisanship doesn't factor in to the outcome, legal scholars point out that appointees of Democratic and Republican presidents tend to have different approaches to statutory construction, which in this case gives Obamacare an advantage.

Tim Jost, a law professor at Washington & Lee University, suggested that judges aren't always immune to outside influence, calling to mind a previous effort by conservative political commentators and lawyers to give mainstream credibility to what was once viewed as a fringe legal theory against the individual mandate, argued in the landmark Supreme Court case brought by the National Federation of Independent Business.

"In the NFIB case, the right-wing media kept repeating over and over again that if the government can make you buy insurance, they can make you eat broccoli," Jost said before the D.C. Circuit ruling. "Soon the mainstream media picked up this meme and finally it appeared in the Supreme Court decision."

White, the author of the Journal op-ed, rejected the notion that he was strategizing to undermine the D.C. Circuit's potential rehearing. "I have no power to legitimize or delegitimize anything the D.C. Circuit or Supreme Court does. I'm amused by the suggestion that I could even do that," he told TPM. He countered that he was merely responding to implications that the partisan split on the court make it an open-and-shut case for Obamacare supporters. He said that as a former clerk on the court and a student of it, he wanted to lay out its history when it comes to en banc grants.

The challengers at the 4th Circuit have already appealed to the Supreme Court for a final judgment, and four justices have to agree to hear it for that to happen. "The only way to overturn the 4th Circuit decision is through Supreme Court review. So I'm pretty confident that the plaintiffs are seeking ultimate Supreme Court resolution of these questions," Adler said.

White argued that the Supreme Court would be "justified" in taking case even if the full D.C. Circuit court reverses its ruling and aligns with each of the other courts. "Even if there were not a circuit split I think this is an issue that the Supreme Court ought to take up," he said.

And if the case comes before the justices, all bets are off. Progressive legal scholars still expect to win but they worry that the five-member Republican majority could make mischief fairly easily because a statutory ruling against Obamacare subsidies wouldn't impact American law more broadly. Conservative advocates, who came within a hair of wiping out Obamacare in its entirety at the Supreme Court in 2012, are optimistic about their chances there.

At stake here are subsidies for millions of low- to middle-income Americans in the 36 states that opted not to build their own Obamacare exchange. A ruling against the government could jeopardize other key components of the law.

"I feel very strongly that our arguments are correct," White said. "I would hope that a majority of the Supreme Court justices agree."

About The Author

Sahil Kapur is TPM's senior congressional reporter and Supreme Court correspondent. His articles have been published in the Huffington Post, The Guardian and The New Republic. Email him at sahil@talkingpointsmemo.com and follow him on Twitter at @sahilkapur.